It's hard to ignore the talk around thecommoditization and disintermediation of personal lines insuranceand its implication of the slow but inevitable demise of thepersonal lines agent. Consumers' expectations are pushinginsurers to provide on-demand, online and mobile underwritingplatforms and service solutions. The growth in the direct channelhas been phenomenal and will likely continue. Comparativeraters, increasing advertising budgets and sophisticated technologyhas made buying and selling on price rather than value a majorfocus in recent years, especially in auto.

This evolution is definitely putting pressure on many personallines-focused agents. Research supports this and we can probablyall recognize some facet of this through our own insurance buyingexperience.

However, I think we have lost sight of the fact that there isstill a lot of value in the agency channel—both independents andcaptives–and many companies are positioning themselves tocapitalize on this, even as they continue to recognize the impactof technology and changing consumer expectations.

I concede that the agent's role today will likely not look thesame as it will tomorrow. Many agents and agent associationsare actively engaged in adjusting to these evolving trends.Project CAP, aninitiative launched by the Big I and several carriers, reportsmeaningful progress with its portal that allows insurance shoppersto compare quotes from multiple independent carriers and connectwith local independent agents who can best serve them.

Many captive insurers are engaged in a variety of sales andsystems integration initiatives between their exclusive agents andother sales channels. And agents that sell personal lines arelikely also selling commercial and specialty lines, and may feelinclined to adjust their mix of business to meet changing demandand target customers.

So while tomorrow's agent will have to adjust, I believe thatthere is a future for agents selling personal lines—contrary towhat's implied in much of the talk around the industry. Companies investing in “omni-channel” capabilities are notnecessarily negating access to agents in the buying process.

Over the past several weeks, a few “big brand” public insurancecompanies have stressed their commitment to the independentpersonal lines agency channel and highlighted the value they bringto their target customer segment. These carriers are focused on the“higher lifetime value” customer who tends to be a multi-product(auto, home, umbrella, etc) preferred risk, who offers appealingprofit characteristics, improved retention and has a large presencein the agency channel.

For example, Progressive—a company many automatically connectwith the direct market—has one of the largest independent agencypersonal lines book of businesses in the market. Progressive haspublicly stated that it wants to grow market share in the preferredand bundled market and sees large opportunity to do so through itsindependent agency force. Again, management is not ignoringthe direct channel for this target market, but has acknowledgedthat this segment of the population has a huge presence in theindependent and exclusive agency channel, which cannot beignored.

Travelers, another major personal lines independent agencywriter, recently held an investor presentation reinforcing itscommitment to the channel as it seeks to maintain and grow itslarge preferred account customer base. Like Progressive, althoughthey are investing in direct capabilities and want to ensure thattheir prospective and current customers are catered to however theychoose to transact or desire to be serviced, management reiteratedthe importance of agents to their long-term strategy. Travelersalso recently made a large investment in Project CAP to furthersupport the cause of independent agents.

Last but not least, The Hanover spent a good deal of timehighlighting its strong partnership with its agency force as wellas the enormous opportunity it perceives within the independentagency channel to grow its personal lines account-based customerbase. The Hanover designed its comprehensive product with theindependent agent in mind, targeting those individuals whowantvalue and quality rather than the lowest price. This is ahighly desirable customer segment which Hanover believes willprovide a longer term return than the price-sensitive monolinecustomer. Even within the comparative rater environment, Hanover isseeing strong current and potential gains in selling its packagedoffering through advisors.

While these are high-profile companies, they're not a “selectfew”; many others are aggressively targeting the preferred, bundledconsumer and continue to see value in transacting with agents.

The future is not necessarily all or nothing—where in onepossible world we have online, digital and dis-intermediatedsolutions selling on price, and the other with agents as a trustedadvisor selling on value. The personal lines insurance customer istoo complex and diverse with varying degrees of perceived value byagents and insurers.

I sometimes feel we do not appreciate the significance ofpersonal lines agents, specifically with respect to highlydesirable segments (e.g. preferred, account and/or high net-worthrisks). The present and future is multi-faceted—and believe it ornot, as the data demonstrates, there are still many who like theidea of a trusted advisor even as they become more mobile, digital,self-servicing and demanding.